State Based Health Exchanges Are Important

I am writing to suggest that governors of both political parties have tremendous opportunity to use free market principles and set up health insurance exchanges which work and give constituents freedom of choice. There is a lot of discussion about health insurance exchanges as it relates to President Obama's Affordable Care Act. Some governors have a negative opinion of insurance exchanges and I believe that by doing so they are giving up a tremendous opportunity to use marketplace choice and allow insurance companies to compete in their respective states. It would be a terrible mistake to have governors give up that opportunity to set up exchanges and forfeit that opportunity back to the federal government which would limit states' rights and their constituents' ability to pick and choose the best insurance for themselves and their families.

Just as governors did during welfare reform, by using these kinds of free market principles to chart a new course in dealing with welfare, they gave people hope for a job and independence and did not lock them into welfare dependency. Exchanges can be and should be a market-based solution. As a Republican and an advocate of market-placed innovation, I believe that health care should possess the same entrepreneurship zeal and leverage of technology that allows us to create an Apple iPhone or Amazon e-commerce portal.

Here's the most important thing that we must all understand about exchanges -- they are a market-place that can be implemented with a light touch. Exchanges are essentially an Internet portal with supporting customer service that provide individuals and small businesses with the ability to compare rates, benefits and quality across competing insurance options by allowing private insurers to offer such competitive plans in an open and transparent marketplace.

States must preserve their rights to operate the exchange: If states do not build an exchange, the Affordable Care Act requires that the Federal government step in and run the exchange. This is a great opportunity for states to be a laboratory of innovation. Whoever controls the exchange also controls access to and entry into the state Medicaid program. If you give control of the exchange to the Federal government, you also give them control of the Federal Medicaid grant program. Do we really need to provide the Federal government day-to-day control into the largest liability items on the state budget?

Court action is unlikely to torpedo the exchange. Several lawsuits have questioned the legality of health care reform and in particular the mandate to buy health insurance, but the Exchange itself is not the focal point of such litigation. The Supreme Court's anticipated ruling on the individual mandate is thus unlikely to abolish the exchange unless the Court strikes down the law in its entirety. Any narrow ruling against the mandate itself will not preclude the rest of the health care reform law, including the exchange directive, from being enforced by the federal government.

An exchange does not need to create a new bureaucracy. Many of the opponents to the Affordable Care Act are concerned about creating yet another state bureaucracy. They are right about this concern -- but this concern can be addressed if states plan wisely. Many states across the country today operate health insurance programs of "last resort" for at-risk citizens, and such programs are essentially out-sourced. I believe that this is the right model for exchanges -- states can simply organize the private market, and specify how an exchange ought to operate to create transparency and audit them, but do not actually need to run them.

Exchanges are a market-place, let us make them a state market-place. Exchanges are a vehicle for future innovation in health care delivery -- and if there is one thing we know we all need here, it is a platform for better ideas. States that take charge of the exchange will be in the driver's seat; those that don't will take a back-seat to the federal government.